Mining News

According to Shawn McCarthy’s article in the Globe and Mail
September 4th, the federal, provincial and territorial resource ministers are in
agreement that Canada should require mining companies to disclose what they pay
to various levels of government both in Canada and for their foreign operations. This
agreement was reached last week at a meeting of natural resource ministers in
Yellowknife where provinces and territories have agreed to work with the federal
government in support of commitments made by Prime Minister Stephen Harper
earlier this summer at the G8 summit in London. Furthermore, they have agreed on
a deadline of 2015 to implement the new standards.

Despite this agreement, challenges remain in how to actually implement
publish-what-you-pay. The mining industry has advocated for mandatory disclosure
of payments to government and—in a joint report between the Mining Association of
Canada, Prospectors and Developers Association of Canada, Publish What You Pay-
Canada and Revenue Watch Institute—suggested that such regulations should be
through provincial securities commissions.

However, in the USA, where such an approach was taken, legal challenges have
delayed its implementation. The Securities and Exchange Commission (SEC) drafted
rules to meet the 2010 Dodd-Frank Wall Street reform laws including mandatory reporting of
payments to foreign governments, also known as the Cardin-Lugar rule. Such
reporting was successfully challenged in court by the oil industry and earlier this
week the SEC decided not to appeal a July ruling that tossed out the mandatory
disclosure of payments. As reported by Ana Komnecic on Mining.com:

Opponents of the regulation argue that it hinders competitiveness and
would be very costly to implement. Business groups also point out the fact that
some countries such as Angola and China have laws which mandate the exact
opposite: Resource extraction companies may not disclose
payments.

The Canadian Association of Petroleum Producers has already expressed concerns regarding the
burden that disclosure regulations in Canada could impose, although they do
support the principle of transparency.

McCarthy also notes ongoing challenges between federal and provincial
securities regulators, whose cooperation would be required:

Proponents fear the push for publish-what-you-pay laws will become
enmeshed in the ongoing dispute between Ottawa and some provinces over a
proposed national securities regulator, with the provinces wary that the
Conservative government will use it as Trojan Horse to enter what they claim as
exclusive jurisdiction.

The potential extension of disclosure rules to First Nations has also raised
concerns although the mining industry and its NGO partners have recommended
that it that it be “taken off the table to avoid a lengthy battle that would delay
broader implementation of the rules”. Ottawa’s position on this is yet unclear.

With all of these issues, getting agreement from the federal, provincial and
territorial resource ministers was likely the easy part. Finding a way to implement
publish-what-you-pay by 2015 will undoubtedly more challenging.